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Thursday, January 3, 2013

Vanguard Wellesley Income Fund (VWINX), A Fund For Everyone

Though
I am known as recommending individual stocks as investments, I have been asked
by my family, friends, and readers which mutual fund I would recommend for
people who simply are too afraid to invest in individual securities and after
studying plenty of different mutual funds, I think I have a good candidate.
When I first began this journey, I had to get my “growth stock” way of thinking
out of my mind, I mean I was trying to find an investment vehicle that even my
sister (if you knew her you would understand) would not get nervous about. I
also needed it to be highly rated by Morningstar, low in cost, and performance
comparable to the S&P 500 over a long period of time. The fund that I have
chosen is the Wellesley Income Fund (VWINX) from Vanguard.

The Fund Profile

According
to Vanguard, The Wellesley Income fund has been around for 40 years and is
considered a conservative balanced fund that typically invest in both stocks
and investment-grade bonds. The fund is unique in its allocation: one-third to
stocks and two-thirds to bonds. The fund is a no-load fund with ayield of around 2.3%. and an expense ratio of
.25%. The Wellesley Income Fund also has a five-star rating from Morningstar.

The Performance

The
Wellesley Income fund has had a total return of over 35% (dividends reinvested)
over the last 5 years, this easily surpassed the total return of the S&P
500 of about 6% (dividends reinvested). The fund also managed to accomplish this
with less volatility than the Index. I have also attached a chart showing the
monthly percentage change over the last ten years (dividends reinvested)
comparing The Wellesley Income Fund (VWINX) to both the S&P 500 (SPY) and
the bellwether Johnson & Johnson (JNJ). The total return of The Wellesley
Income Fund over the last ten years is around 96% with dividends reinvested
which is slightly higher than the S&P 500 which returned about 93% and
trumps the return of 70% for Johnson & Johnson. Statistics and descriptions
form various sources including Yahoo! Finance, MSN Money, Low-Risk Investing and Stock Rover.

It is rare to find mutual funds that can consistently beat
the major market indexes, but to find a conservative balanced fund that can
manage to do it is nothing short of a miracle in my opinion. The Wellesley
Income Fund from Vanguard is the one fund that I can now recommend to long-term
investors both new and old, with its low costs, market beating performance, and
minimal volatility; it is truly a fund for everyone.

Disclaimer: All
articles are written as an opinion of the writer or writers. The contributors
on this website are not professional investment advisors. These articles are
written to share investing ideas that may be of interest to the reader. Always
seek the advice of a professional investment advisor before investing.

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About This Blog

This blog is an extension of ideas and opinions from me (J. A. Saglimbeni) and my fellow contributors. I created it to try to influence my readers to think differently about their dreams and ambitions. I firmly believe that one can succeed in life even after hardships (believe me I have had a few) and can create a great life and hopefully can make their dreams come true. Enjoy!